BIMSTEC Taking Shape, Finally
Gorkhapatra, Nepal
Editorial
BIMSTEC Taking Shape, Finally
By Shankar Acharya
26 July 2006
The Bay of Bengal for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), a regional trading bloc of seven South and Southeast Asian countries, is giving final shape to its free trade agreement in Colombo this week.
The four-day meeting that began the other day is crucial to streamlining an agreement on free trade in this region. The meeting of the high-level officials will prepare the general modality of the free trading agreements (FTA) and propose a date for their implementation.
Focus
The meeting this time will zero in on outstanding issues of the free trade accord on trade in goods. Apart from that, issues relating to free trade in services is also being dealt with.
Like other FTAs, some trade issues - including the rules of origin, negative list for tariff reduction and list of items to be opened under the fast track of trade liberalization programme - are also being discussed.
On top of that, technical experts from all the member countries will negotiate on a separate framework of dispute settlement mechanism and fix the day for the operationalisation of BIMSTEC.
It is believed that negotiating with BIMSTEC will be easier than with SAFTA because all the BIMSTEC members are purely guided by economic interests rather than by political ego or other interests.
All the seven BIMSTEC members have openly agreed to set up a free trade area for service trade and investment by July 2007. Negotiations on the FTA regarding services and investment began in January this year.
To give impetus to the FTA, the BIMSTEC members have agreed to initiate trade under the ’fast track’ and ’normal track’ under trade liberalization.
BIMSTEC aims to cover various sectors including science and technology, trade and investment, communication and transportation, energy, tourism, agriculture and fisheries, human resource development and people-to-people contact.
When the idea of BIMSTEC germinated in August 1998 in Bangkok, the member nations were focussed on facilitating trade, increasing investment and promoting technical cooperation.
First of all, the framework agreement on the BIMSTEC Free Trade Area aims at strengthening and enhancing economic, trade and investment cooperation among the parties. Secondly, the framework agreement will push for gradual liberalisation and promotion of trade in goods and services by creating a transparent, liberal and facilitative investment regime.
On top of that, the agreement will try to explore new areas and develop appropriate measures for closer cooperation among the parties, and facilitate more effective economic integration of the least developed countries in the region and help bridge the development gap among the parties.
The BIMSTEC-FTA includes various instruments. They include issues concerning rules of origin (RO), Negative Lists (NL), Fast Track (FT), Normal Track (NT), Safeguard measures (SM) and Dispute Settlement Mechanism (DSM).
The FTA on goods was scheduled to come into force from July 1 this year, but it was postponed due to the political situation in Thailand and Sri Lanka.
The Trade Negotiating Committee (TNC) formed to settle trade issues with all the BIMSTEC members has already held 11 meetings in different places. However, the member states are yet to finalize the agreement on trade in goods. The TNC has only so far finalised the Dispute Settlement Mechanism.
The TNC has sought additional time to finalize other issues. Under the tariff liberalisation programme, the contracting parties have agreed to directly reduce tariffs under the fast track to zero per cent.
In the mean time, the normal track will gradually reduce tariffs in the range of zero to 5 per cent within 10 years after an agreement is reached.
From the very beginning Nepal has been attending all the meetings of the TNC. It has raised numerous issues to benefit from agreements reached. It has consulted the private sector and other stakeholders, including the civil society, while preparing the negotiation strategies.
BIMSTEC will act as a stimulus for strengthening economic cooperation among the member countries. It will also lower costs, increase intra-regional trade and investment. Furthermore, the BIMSTEC- FTA forum is meant to increase economic efficiency and create a larger market.
Studies show that the total volume of the BIMSTEC economy is over US$ 750 billion, spread over a population of 1.3 billion. In reality, all the BIMSTEC member countries possess vast resources and potential of different levels and are at different levels of economic and industrial development.
The BIMSTEC FTA is a body of Least Developed Countries (LDCs) and developing countries committed to creating trade, diversifying and expanding trade. The LDCs must, therefore, search for the treatment given by the developing countries to boost their economy.
Crucial
The meeting of the TNC in Colombo, therefore, is crucial in thrashing out solutions for trade in services and trade in goods. Nepal being a least developed country (LDC) can pin much hope on BIMSTEC for free and fair practice of trade. Nepal can expect to foster economic growth, alleviate poverty by creating jobs through BIMSTEC. Besides this will also strengthen and promote regional cooperation not only in South Asia but also with some ASEAN countries as well.
